"There's a global slowdown underway, probably a recession for Europe and we're teetering on the edge of one," said Keith Hembre, chief economist for Nuveen Asset Management. "There's just one global economy, one with varying degrees of global pain."

The European manufacturing and service sector figures from Markit Economics were particularly worrisome, as each shifted from showing modest growth to declines in September. They were the worst readings since July 2009.

Even activity in the stronger European economies, such as Germany and France, declined to near the break-even point.

In the U.K., the CBI manufacturing index showed 9% more manufacturers reporting weaker than normal orders rather than better than normal demand. British manufacturers cited "the volatility in financial markets and the slowdown in growth in [their] major trading partners."

And the HSBC manufacturing index for China for August, also released Thursday, also showed a pullback on production and new orders.

John Higgins, senior markets economist for Capital Economics, said the European readings are the "the strongest sign yet that the region is on the cusp of recession." That's particularly troublesome since Europe's economy could get worse if there is a default in sovereign debt by Greece.

Higgins added that the slowdown in manufacturing in China is a worry given the importance that China has played as the engine of global growth coming out of the Great Recession.

"There is a broad brush concern that even if the Chinese economy is not shrinking, it is slowing, and that slowing is bad news for the rest of the world," he said.

A decline in global economic activity is relatively rare -- 2009 was the only year since World War II that occurred, said Sal Guatieri, senior economist at BMO Capital Markets. But he said a global decline isn't necessary for the economic weakness to spread among major economies.

"We still don't anticipate a global recession, but admittedly the odds are rising," he said.

Economists say the Fed may not help much either .The central bank is seeking to lower already low interest rates further through a process dubbed Operation Twist. But it's doubtful that will restart growth in developed economies like the United States, Europe and Japan.

Thursday's weak economic readings only amplified those fears.

"Investors are losing their faith in policymakers' ability to right these economies," said Higgins. "Especially in the advanced economies, policymakers are lot more impotent than they were three years ago during that crisis. People are very skeptical there's any silver bullet."